Australia’s first employee-led mutual wins AUS$47m contract

Public servants in South Australia are setting up an independent, employee-led mutual organisation to provide government services, in the country’s first such project.

The organisation, which is staffed by former officials of the Government of South Australia, will deliver early intervention services for children with disabilities and developmental delays under the National Disability Insurance Scheme (NDIS).

The state government has won an AUS$47m (US$36m) contract from the Australian Government for early childhood and early intervention (ECEI) services, to be provided across South Australia. Launching this month, the scheme is part of a national roll-out of the NDIS.

Mutual benefits

The mutual has also struck an agreement with the National Disability Insurance Agency to become the community partner charged with delivering ECEI services, which target children aged up to six years along with their families and carers.

Announcing the grant last month, the Australian government’s minister for social services Dan Tehan said: “The NDIS is expected to boost the South Australian economy by AUS$740m [US$570m) and bring more than 5,000 new jobs in disability services to the state. The number of people accessing support is expected to grow from 17,000 to 32,300”.

Minister for education and training Simon Birmingham said the creation of the South Australian employee-led mutual is an example of “the innovation and creativity required to deliver the NDIS”, which he described as “a world-first, ground-breaking scheme.”

Personalised service

Dan Tehan, minister for social services, Australian Government (Image courtesy: Department of Social Services, Australian Government.).

The state government said in a statement that the partnership aims to improve long-term outcomes for children with disabilities by helping them to receive the support they need in the way that they need it.

“The agreement also ensures that the highly-skilled allied health and support workforce, currently employed by the state government’s child and youth services [department], will continue delivering services to children with disability and developmental delay,” it said.

“The employee-led mutual will deliver services under a co-operative structure, with members of the organisation pivotal in the decision-making. It is expected that the ECEI grant agreement will create 50 full-time roles.”

Employee owned

Mutual organisations – which are owned by their employees and, sometimes, their customers – have long operated within many countries’ private and voluntary sectors. Under the model, staff and customers have a voice in developing strategy, oversee the organisation’s executives and share in any profits.

The idea of spinning out parts of the public sector as employee-owned mutuals able to bid for government business was recently championed in the UK by Francis Maude, the UK civil service minister 2010-2015. Maude argued that the model would improve morale and innovation, and about 100 public sector units and organisations became mutuals during his tenure. But take-up fell far short of his ambitions, and the project held up as the programme’s flagship – the civil service pension provider MyCSP – quickly suffered serious service failures. Although MyCSP is not a true mutual, its association with the programme led to reputational damage to the agenda. The current UK government has shown little interest in the subject.

The model does, however, represent an alternative to privatisation that may win greater support among staff, service users and the public. Melina Morrison, chief executive officer of The Business Council of Co-operatives and Mutuals, said: “The South Australian Government is to be congratulated for thinking outside the box and adopting the hybrid, mutual method of delivering these vital services, instead of going down the track of full privatisation.

“This truly innovative move marks the first time in Australia that a government has supported the establishment of an employee-owned social welfare business.”

This article has been edited to reflect comments by reader Duncan Wallace.

About Liz Heron

Liz Heron is a journalist based in London, who specialises in international news. She worked on daily newspapers for 16 years, reporting extensively on both general news and education. She was Education Editor of the South China Morning Post in Hong Kong and has contributed to a wide range of British media including The Independent, The Guardian and the BBC.

One Comment

This is an excellent article but it needs to clarify that MyCSP (the civil service pension provider) was never a mutual. When it was created it was 40% owned by private investors, one quarter through an employee share trust and the remaining 35% held by the Government. The Government then sold 11% of its stake to the private investor (Equiniti) in late 2014 giving the private investor majority control, while the employee ownership arrangement remained the same at 25% . Its failures shouldn’t be understood as a failure of the mutual model.

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